The Petrobras logo is seen in front of the company's headquarters in Sao Paulo
SAO PAULO (Reuters) - State-controlled oil producer Petróleo Brasileiro SA has begun a search for a strategic partner for fuel distribution unit BR Distribuidora, which in recent weeks scrapped an initial public offering plan in light of deteriorating market conditions.
In a securities filing on Wednesday, the board of Petrobras, as the oil firm is commonly known, gave the go-ahead to management to proceed with the search for a partner. The process will be discussed at the next board meeting, the filing noted, without elaborating.
The filing indicated that management and board members at Petrobras are gauging more carefully the options for the high-performing unit. BR Distribuidora, which earned 121 billion reais (US$32 billion) in revenue last year and owns Brazil's largest gasoline and biofuel station network, was valued at $10 billion by UBS Securities analysts around July.
Reuters reported late in August that executives told the board that the impact of market turmoil on strategic decisions like BR Distribuidora SA's listing should be analyzed more carefully. Petrobras is disposing of more than $15 billion of assets it considers non-essential by the end of next year as part of an effort to reduce debt, which at $140 billion remains the largest of any major oil company.
There had been growing internal opposition to the IPO, coupled with a rout in local equity and currency markets as political and economic turmoil increased in latin America's largest economy.
Petrobras had hired Citigroup Inc to advise on strategic options for BR Distribuidora, sources said earlier this year.
(Reporting by Guillermo Parra-Bernal; Editing by Chris Reese)